The Daily Record
BALTIMORE (AP) — Maryland has more than 30,000 nonprofit organizations.
That’s approximately one for every 180 Maryland citizens. That’s about 10,000 more than the number of retail businesses in the state. And it’s about 20 times the number of public schools.
Does Maryland really need that many?
“It is large and it is vast,” Kelly Hodge-Williams said of the nonprofit community in Maryland. As the executive director of Baltimore-based Business Volunteers Maryland, she interacts with those organizations often in order to connect individuals and businesses with volunteering opportunities.
“Nonprofits complain that businesspeople often say there are too many nonprofits,” she said, but the answer to that question is in the organizations’ ability to fulfill their missions.
“The metrics of our sector is: `How many services did you deliver? How many people did you engage?”‘ said Marty Kearns, who organizes the Moving Maryland Forward Network.
But this metric is not easily measurable, said Michael Schlein, charities and notaries investigator for the Maryland secretary of state.
“If they’re getting funding and they’re doing their job, then 30,000 is probably a good number,” said Schlein, “but if they’re not, then there’re probably too much.”
And the current number applies only to those organizations that did not lose their tax-exempt status with the Internal Revenue Service after the Pension Protection Act of 2006 went into effect. It is possible that some of those groups are still active, but are not listed in IRS databases. It is also likely that some organizations currently listed as active are not and will lose their status in three years or less.
The Pension Protection Act requires that all nonprofits, regardless of size or income, file an annual Form 990 with the IRS. Organizations that fail to do so for three consecutive years lose their tax-exempt status.
Since that happened, 11,663 organizations in Maryland have lost their status, according to IRS records. Of those revocations, 1,855 took place in 2013 alone.
Some of those organizations had intended to stay tax-exempt, said Heather Iliff, director of the consulting group at the Maryland Association of Nonprofit Organizations, also known as Maryland Nonprofits. Occasionally an organization will call the association for advice upon realizing that it has lost its status with the IRS.
Getting that status back is laborious, said Andrew Friedson, spokesman for Maryland Comptroller Peter Franchot. That is why Franchot recently began a mailing program to notify at-risk nonprofits of the requirement to file.
In many cases, that notification will go to an organization that no longer needs tax exemption.
“This dropping of the rules is really just a trimming of organizations that simply weren’t active,” said Iliff.
Before the Pension Protection Act, an inactive nonprofit could stay on the books for years after closing, either because it reached its goals or because it could no longer work toward them.
Of Maryland’s 32,001 nonprofits (as of September 2012), 66 percent bring in less than $25,000 per year, and 77 percent bring in less than $100,000, according to Maryland Nonprofits’ 2013 “Nonprofits by the Numbers” report.
More than 13,000 nonprofit organizations launched in Maryland between 2000 and 2007, according to the Urban Institute. More than a quarter of them have already lost their tax-exempt status and likely disbanded.
“You had a lot of organizations that never got to the level they had hoped to,” said Henry Bogdan, managing director for public policy and public affairs at Maryland Nonprofits. “There’s just a lot of competition for funding.”
Because of this intense competition, Maryland Nonprofits will often encourage aspiring startups to join forces with existing organizations instead.
“Most founders want to run their own organization and feel that they have a unique contribution to make,” said Iliff. “Usually we try to talk them out of it, and usually they resist.”
And once an organization has begun to establish itself, merging is easier said than done.
“There is a sense of ownership often,” said Hodge-Williams. “There could be some benefit to partnerships or mergers . (but) it needs to be done thoughtfully.”
In a few cases, joining forces can pay off.
For five watershed organizations in Baltimore, similar missions in nearby neighborhoods made the case for a merger. As of September 2010, the five organizations became one — Bluewater Baltimore.
“All of the reasons why we merged are working,” said Bluewater Baltimore Executive Director Halle Van der Gaag. “We’ve eliminated redundancies and are able to be more strategic and more efficient.”
But the process came with challenges, she said. With five different organizational cultures, a new revenue structure and changes to the leadership, merging was no easy task. In their case, it worked, but only due to the rare concurrence of five organizational missions.
“I think people need to be honest with themselves about what the goal is,” said Van der Gaag. “If people feel that they’re really doing it for mission and not about the money, then I think that’s really essential.”
For those who have no merging opportunities or who want to maintain power over their organizations, collaboration can be the answer to advancing the nonprofit’s mission. In some cases, collaboration between groups can serve a specific cause better than a new organization would.
“It’s bringing the right components that already exist together to create a new thing, without creating a new organization,” said Virginia Knowlton Marcus, executive director of the nonprofit Maryland Disability Law Center and a member of the Moving Maryland Forward Network.
Through collaboration, Knowlton Marcus’ organization was able to start the CityWide Special Education Advocacy Project for Baltimore.
“We got with other groups that also want to do something,” said Knowlton Marcus. “I would say that it is a model that can work and we have made it work . in response to specific needs.”
The Moving Maryland Forward Network has allowed her to make connections throughout the state’s nonprofit community. While she learns from other leaders, she can also share with them how their organizations can better address the needs of people with disabilities within the populations they serve.
“We try and get them to at least acknowledge each other’s schedules,” Kearns said of Moving Maryland Forward Network members, “and find new ways to collaborate.”
While working together on projects involves less commitment than merging, organizations are still wary of doing so without due diligence.
“Collaboration is an investment,” said Kearns. “If they’re not sure that collaboration is going to pay off, then they resist.”
The Trawick Foundation, which funds nonprofit programs in Montgomery County, has taken on this obstacle by creating grants that require collaboration. The Team Up grant project, for instance, allows one applicant each year to implement a program benefiting middle school children — but each applicant must be a team of at least four organizations, only two of which can have a budget of $1 million or more.
“There’s duplication and redundancy in some of the things that nonprofits are doing,” said Carol Trawick, who founded the foundation with her late husband, Jim Trawick, in 2007. “That’s not very efficient and it’s wasting resources.”
Partnerships like those in Team Up, she said, allow smaller nonprofits, startups or those with specific specialties to reach a broader set of goals.
As an example, she referenced the potential for connecting art and social services. Many in the social services want to provide art opportunities for children with disabilities for the therapeutic qualities, but have no expertise in the arts. The arts organizations, meanwhile, want to help children with disabilities, but lack social services staff. By partnering, they can create a project to reach their common goal.
These partnerships are wise, said Trawick, not only for the community’s benefit, but also for the survival of worthwhile organizations.
“If the need remains the same, and another nonprofit sets up to do the same thing . then there’s not enough need for both of them,” she said. “The smart organizations will look and see how they can combine their efforts to survive.”
Information from: The Daily Record of Baltimore, http://www.mddailyrecord.com
(Copyright 2013 by The Associated Press. All Rights Reserved.)